14 May DETERMINE THE NUMBER OF UNITS THAT WILL NEED TO BE PURCHASED.
TabComp Ltd is a retail distributor for MZB-33 computer hardware and related software and support services. TabComp prepares sales forecasts of which the first six months of 2014 are presented here.
Cash sales account for 25% of total sales, 30% of total sales are paid by bank credit card and the remaining 45% are on open account. The cash sales and cash from bank credit cards sales are received in the month of sale. Bank credit card sales are subject to a 4% discount. The cash receipts for sales on the open account are 70% in the month following the sale and 28% in the second month after the sale. The remaining accounts receivables are estimated to be uncollectible.
TabComp’s month end inventory requirements for computer hardware units are 30% of the next month’s sales. TabComp’s purchase price for the computer units is 60% of the selling price.
TabComp Ltd
Sales Forecast for first six months of 2014
Hardware SalesSoftware Sales & SupportTotal revenues
Units $ $ $
January 130 390,000 160,000 550,000
February 120 360,000 140,000 500,000
March 110 330,000 150,000 480,000
April 90 270,000 130,000 400,000
May 100 300,000 125,000 425,000
June 125375,000225,000600,000
Total 675 2,025,000 930,000 2,955,000
Required:
1. Calculate the cash that TabComp can expect to collect during April 2014. Show all calculations.
TabComp is planning the purchase of MZB-33 computer hardware units for March 2014.
a. Determine the number of units that will need to be purchased. (2 Marks)
b. Calculate the total costs of this purchase.
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